Automakers brace for tough scrutiny after VW emissions scandal

(Bloomberg) -- Automakers have to be clearer about the way they certify their fuel economy and emission ratings as regulators ramp up scrutiny into the gulf between laboratory results and on-road conditions, Daimler CEO Dieter Zetsche said.

"You can only be transparent and if there's any shortfalls anywhere, fix them and move forward," Zetsche told Bloomberg News ahead of the Beijing auto show opening this week. "It will take some time" for the auto industry in general to be where it was before the Frankfurt auto show last year, he said.

Revelations about Volkswagen Group's cheating on diesel emissions emerged after the Frankfurt show in September. Since then, government fraud investigators have raided French manufacturers PSA Group and Renault as part of broader checks into vehicle emissions. In Japan, Mitsubishi Motors said that it manipulated fuel-economy tests to mislead consumers.

Daimler said last week it had been asked by the U.S. Department of Justice to investigate the certification process of its cars. The internal probe follows U.S. class action suits that allege some of its cars violated emissions standards. Daimler has said it's cooperating fully with authorities and that the suits are "baseless."

The suits against Daimler say Mercedes-Benz clean-diesel models contain a device that causes the vehicles to violate U.S. emissions standards when run at cooler temperatures, making them less environmentally friendly than advertised. Specifically, the automaker was accused of using a device in its BlueTec cars to turn off a system meant to reduce polluting nitrogen oxides in its exhaust.

The U.S. Environmental Protection Agency also contacted Daimler earlier this year over the allegations, which Zetsche rejected in February as without merit. While Daimler has acknowledged the existence of a device, it says it's legal and designed to protect the engine.

China regulation

Mike Manley, Jeep brand chief, said at a briefing in Beijing, said his "company has been fairly clear in terms of performance against the standards "regardless of which market we are in."

Going by the rules that are being proposed, China will be the toughest regulatory regime over the next five years, Ford Motor CEO Mark Fields said on Saturday in Beijing, where the company showed the F-150 Raptor pickup truck. Public health and environmental concerns are driving the scrutiny, and the second-largest U.S. automaker would support China adopting on-road emissions testing measures passed by the European Union, he said.

China, home to the world's biggest auto market with more than 24 million vehicles sold last year, is aiming to improve fuel economy by about a third in 2020 from 2014 levels to reduce carbon-dioxide emissions, in large part by pushing automakers to introduce exhaust-free electric vehicles to balance against their sales of gas-guzzling SUVs.

"It's going to be tough," said Hakan Samuelsson, Volvo Cars CEO. "Legislation in China is world-class. No relaxed regulations in China."

Zetsche said that Daimler is "very active" in helping European authorities enhance and accelerate the definition of new testing cycles that give a close comparison between test and reality for fuel consumption.

Public understanding

"The same applies for the emissions," he said at an event Sunday to unveil the stretched Mercedes-Benz E class. "We think that is one important element that you get more similarity there and the general public can understand better than today because there is less difference between what you measure outside and what you measure in the lab."

While testing real-world driving emissions will give a more realistic measurement, the move "will add to the technological complexity," said Herbert Diess, who heads VW Group's namesake brand. "Treating emissions is very complex, and there are different rules in many different countries. Today, emissions controls are about as expensive as the engine itself."

Even then, the numbers achieved at proving grounds and during certification will always differ from what consumers get in real-world driving, according to Toyota's China chief, Hiroji Onishi. While the world's largest automaker has engaged in no misconduct in meeting legal requirements, consumers will be carefully monitoring the difference, particularly with the hybrids it's bringing to market promoted for their fuel efficiency, he said.

"We try to think on the actual usage of the vehicle and try to work in a way that will be helpful in the real world," Onishi told reporters on Sunday. "There will always be a gap between these two figures."